Entertainment Network India Limited (ENIL)

(aashish2137) #62

Relevant news for this discussion: http://indianexpress.com/article/technology/tech-news-technology/saavns-original-programming-series-aims-to-change-radio-forever-2778974/

Saavn is aggressively bringing existing and new podcasts under its umbrella and getting significant first mover advantage.

(Nelson) #63

Gaana app has shown something similar…it has stand up comedy+music combination program so it is also not too far behind. I personally use the app.

(Nelson) #64

Reliance Jio to launch with a host of apps which also include a music streaming app called Jio Beats.

Talk about competition coming in from unexpected quarters…

(Vishnu Ch) #65

CONFERENCE CALL - from Capital Markets

Focus remain on further inventory reduction across the network

Entertainment Network (India) (ENIL) held a conference call to discuss quarter ended March 2016 result and future prospects of the Company.

Highlights of the call

  • Revenues grew 18% to Rs 147.2 crore. Price and volume led growth. OPM declined by 160 bps to 26.2%. Net Profit declined by 21% to Rs 20.2 crores

  • The underline operating revenue growth was 13% for Q4 and 10% for FY16

  • 32-33% market share retain.

  • Revenue growth achieved on back of price.

  • Effective ad rate increased 13.9% yoy to Rs10700 across stations per 10 sec

  • Inventory utilization on the other hand saw decline of 3% yoy. Blended inventory utilization was at ~100% while top-8 stations utilization was 130%. Focus remain on further inventory reduction across the network

  • Sector that registered strong growth in FY16 for radio industry were – FMCG - 20%, Government - 52%, Auto- 29%, Real estate- 37%, Durables- 19%. E-Commerce spends in 4Q declined 5% yoy.

  • The company now has a portfolio of 53 stations including 17 newly bagged Phase III stations and four Oye FM stations across cities. Of the newly acquired new channels, the company has launched a station in Guwahati, Kochi and Bangalore. The company is looking to launch the remaining new stations over FY17 and expects to turn EBITDA positive for the new stations in four to six quarters.

  • The launched second frequency in Bangalore which is Hindi channel with English speaking RJ. The company has seen lot of traction since the launch while it has decided not take any advertisement for one month of launch. Bangalore market has 75% listenership from Kannada and 25% from Hindi channels while ad rates are other way round. There categories like Real Estate, E-Commerce in Bangalore advertise only on Hindi radio channels.

  • The management doesn’t believe there would be pressure on yields post new stations launches. With launch of new stations in Delhi and Mumbai, there has been limited price disruption. Being the cheapest medium of advertisement and ad rates lower than 2009 levels give confidence that ad rates would not be impacted in future

  • The company has net cash of around Rs 5.5 crore

  • Marketing expenses up due to high television campaign and for some research activity. Next 2 -3 yrs time , it will remain high.

  • Another auction of phase 3 will take 9 months or year.

  • 20% market growth for radio industry for next 5 yrs. Overall ENIL is also expected to grow at par better than radio industry.

  • FMCG, Consumer Durable, Govt, Media & Entertainment, Telecom, Auto are the categories which help radio industry growth in FY17.

  • Capex for FY16 was Rs 725 crore, including Rs 680 crore towards payment to government. In FY17, incremental capex could be in range of Rs 20-25 crore for new station launches

(khashyap) #66

@desaidhwanil, thank you for putting up such a well detailed analysis. It helps newbies like me to take my analysis a step further.

Here is my opinion on ENIL. Please do have a read. Excuse if there are any blatant misses and misunderstanding and highlight

Technology is disruptive, it just changes the way of things very fast. Something which has already matured in developed nations and is in its nascent stages in emerging ones need not necessarily live up to its maturity, may die very early itself. I’m not saying the Radio will die. For example, 60% of Americans have landline phones, whereas the number is almost non existent in African countries. The number is going down in India too. Cell phone has taken over the landlines.
On similar lines, like pointed out by @varadharajanr I feel that the advent of digital advertising and music apps pose a bigger danger than others to the radio here in India. Most of the radio stations in India predominantly just air songs, the programs are very minimal, whereas the extent of programs in America is quite sizeable. Though even there the shows with most listenership are the music ones, the news and talk shows contribute significantly. The talk shows are a big big hit(This can be a potential moat, if at all there is). The dynamics there are different from what is here in India, so comparing ours with theirs will not give us a proper view. With the internet set to grow in the years to come, and looking at the growth of internet and the track record around the world, it will become more affordable. The probability of apps like Gaana, wynk etc doing good doesn’t look very bleak.
Our radio airs mostly music and a very few talk shows or movie reviews or anything of that sort. My own experience is that I just browse channels till i find someone that plays music. Why would I listen to some random ads in between which I actually don’t want to. As such, I do not see any moat with respect to Brand name or programs as they just play songs. The distribution and the reach maybe, which others can eat into. I may be wrong though. The apps allow to download and play music which is what the radio here predominantly does.
Whatsapp almost killed sms today, lets say for example, those same people just jump ship to these apps it might start the next exodus similar to whatsapp. These numbers maybe small, but nevertheless do count as it starts the next movement. When will this happen?, Will it? I don’t have answers, but we all know that technology is disruptive. Who knows, the next morning we might wake up to Gaana than Mirchi.

Looking forward to hear from fellow VPers.

(Rohit Ojha) #67

Entertainment Network (India) Ltd has informed BSE that after Guwahati, Kochi and Bengaluru, the Company has on June 02, 2016 commenced broadcast from its radio station at Hyderabad (2nd channel - 95 FM - acquired under Phase 3 auctions held last financial year).

Jagran had also acquired some frequencies but is yet to launch the channels.

(Nelson) #68

(Hitesh) #69

Hi after going through ENIL 2016 annual report , i found online radio services where users download/stream the songs , its an unviable business for any player

demands of the music industry. Global players
like Spotify, Pandora and Apple Music each
pays between 60-75% of their revenues to
the music providers. In India, the fgures
are possibly worse, with players like Gaana
and Saavn having to pay huge Minimum
Guarantees (MGs) in addition to very high perstream costs (A “stream” is basically one song
played out to one listener. If 1 million listeners

listen to 5 songs each for example, that’s 5
million streams). MG makes the streaming
business virtually a non-starter in India, as
most streaming services incur more than
100% of their revenues in just music costs.

This aside, the music industry issues licenses
only for short periods of time – a maximum of
two years. After that, they raise the MGs again,
and usually very signifcantly. Streaming
services which have managed to “catch-up”
with previous MGs suddenly fnd themselves
back in the red again.

Then there is the global phenomenon of users
not willing to pay for the service. This problem
is especially true in developing countries.
In China, out of nearly 500 million users of
streaming services, not more than 10 million
pay for the service. In India, overall streaming
numbers are much smaller (Monthly Active
Users – MAUs – are of the order of 30 million
or so), but the free nature of the business is
similar. As a result of this, streaming services
are forced to rely on advertising revenues. Till
the streaming numbers grow, and till a large
number of people start using these services
regularly, advertising monies will be slow to
come. It is reported that streaming services
are losing hundreds of crores of rupees every
year and there is no certainty that this will
come down in the near future. Global brands
like Pandora and Spotify continue to make
huge losses even after being in business for
nearly a decade, even though their revenues
have become quite large (Spotify revenues
reportedly crossed $2 billion in CY2015).
Then there is the usual bandwidth and
data cost issues that plague all developing
countries. But with the launch of 4G ser

(narendra) #70

INVESTOR UPDATEq2fy17 investor update ENIL.pdf (613.0 KB)
1.Total income up by 11% to 129 cr
EBITDA 23 cr(17%)
Net profit:7.9 cr(down by 70%)
2. low profitability was due to launch of new channels and marketing expenses.
3. 4 stations acquired from TVTN last year are now profitable.
4. launched 5 new stations
5. cash and cash equivalents:240 cr
6.Debt 260 cr.
second batch of phase 3 auction started on oct 26th.No mention about ENIL bidding for the same.Anybody attended concall can update mannagement view about the same.
Disc: invested

(atul0923) #71

akash prakash of amansa holdings bought today.

(kmvivek) #72

Disclosure: No holding

(narendra) #73

INVESTORS UPDATE FOR Q3enil Q3 FY17.pdf (298.6 KB)

(narendra) #74

Overall growth of 5%

Effect of demonetization:
All sectors(RE/JEWELLARY/FMCG/AUTO…) got severely affected.Maximum impact was during nov(-30%).Partlyrecovered in december due to Govt (with price increase), banking and financial institutes ad spend.
Demon effect continue to persist in Q4. Growth may be impacted by 5-10%.
Things are expected to normalise from Q1 Fy18.

Update on phase 3 stations:
completed launch of “mirchi love” network (8 stations).
currently overall negative at ebitda level.
expected to be profitable by q3/q4 of fy18
continue to focus on brand building/marketing spend.
2nd frequency at Bengaluru and Hyderbad(3rd frequency) getting higher price then legacy stations.
Other newstations(ahmedabad,pune,lucknow…etc) love network is 2nd biggest price leader (1st is mirchi legacy station)
current utilization is around 30 - 40% .At around 40% utilisations ebitda will be positive if we take out the marketing spend.

To become no 1 or 2 station in all cities it operates.
Continue to spend on marketing to build brand.
To reduce inventory to 10 min over next 3 years which increases the listenership and customer stickiness. Expect to maintain revenue growth by taking price hike/ rapid growth in new phase 3 stations and non-radio business.
Current average inventory (for 36 stations) ;13 Min.
top 8 stations:125% utilisation(16 min)
remaining stations:91% utilisation(11min)
price of govt ad spend increased by 22%( effective from mid novemebr)
effective rate up by 8%( Rs.11,100) compared to last yr.

70 to 80% - listenership at home .
on road listenership is growing rapidly(@20%).75% cars on road are tunned to FM. With increase in no of cars FM listenership increases further.
Continue to grow but not at the expense of FM radio.
results of 66 licences ( out of 266 auctioned) are expected to be annouced soon.Most of the stations will be awarded at reserve price(which was high). Only few stations saw good bidding.
demon has affected concert business. Ticket sale was decreased/sponsors pulled out.
60- 70 concerts per year.difficult business with huge gestation period.
Good traction is seen from jan/feb.
Good learning in last one and half yr.Changed the business model. Expected to make good returns.
Next 2 yrs significant growth is expected.huge opportunity in concert business.expected to increase concerts in new cities.

Disclosure: invested.

(Rohit Ojha) #75

Entertainment Network (India) Ltd has informed BSE that Entertainment Network (India) Limited [‘ENIL’/ ‘Radio Mirchi’/‘Mirchi’] participated in the 2nd batch of Phase-3 auctions held between October 26th and December 14th, 2016.

After this batch of auctions, ENIL has acquired licenses in 21 new cities. These are Bhavnagar, Jamnagar, Junagadh, Mehsana, Bharuch and Palanpur in Gujarat, Akola and Amravati in Maharashtra, Tiruchirapalli and Tirunelveli in Tamil Nadu, Rajahmundry in Andhra Pradesh, Warangal in Telengana, Durg/Bhilai and Raigarh in Chhatisgarh, Hubli/Dharwad and Mysuru in Karnataka, Ujjain in Madhya Pradesh, Jhansi in Uttar Pradesh, Asansol and Siliguri in West Bengal and the Union Territory of Puducherry. With these 21 cities, the core Mirchi brand will expand its footprint deeper into strategically important and fast growing cities and states. Its presence will increase from 43 to 64 cities in India.

The total value of bids made by ENIL is Rs. 51.3 crores. These frequencies are expected to become operational towards the end of FY18.

With this, Mirchi will further cement its leadership position in the radio space. With revenues of Rs. 508.6 crores and PAT of Rs 100.0 crores in FY16, it is the leader by far.


(narendra) #76

complete list of second batch phase III resultsPh_III_Batch_2_Result.pdf (984.9 KB)

(ankitm) #77

Don’t want to spoil the party but let’s look at it from a business sustainability and long term earnings growth perspective:

Device Growth: Radio already has ample penetration across the country. There’s no visible trend that people would increasingly move to this channel. In fact most of the demographic will move away from Radio if data becomes cheaper(which has been the trend since the advent of Jio).

Traction of Radio advertising: Again channel shift is occurring towards digital platforms. Also, the target high impact demographic is MOVING AWAY from radio due to traditional advertising models.

Traditional Advertising Model: Traditional advertising models are falling apart. They’re low on engagement, there’s no way to gauge their impact and radio channels themselves have very low customer loyalty to make a listener sit through these ads.

Concept of personalized recommendations: Apple music wants to make it big in India. Pandora and Spotify want to target India. People want personalized recommendations and curated music. My mother herself now listens to music on the Gaana and Saavn apps. She has completely turned the plug on radio for last 6 years.

No or minimal customer loyalty: Ever boarded an Uber or Ola. How many of your drivers sit through those radio ads? There’s minimal stickiness on the channel with almost no content differentiation. NO CONTENT DIFFERENTIATION allows for easy customer drift.

Also, I don’t see tremendous upside on the rural or Tier II front.

Would appreciate arguments from the opposite side of the fence.

(ASPN) #78

Totally agree with you. I myself keep changing radio channels in the car and many a times switch to USB or Bluetooth.

But what has caught my attention is their new offering - Mirchi Love 91.9 FM playing love songs, quick 1 min love stories and some new fresh content. But again, love songs from the 90s is my weak point…

Disc : Already exited

(atulgupta80) #79

Very pertinent point.

(narendra) #80

Revenue and industry growth:
• For the quarter income from opearations: 162 cr(+ 18%) , EBITDA :35cr (- 8%),PAT: 14 cr(-42%). Radio industry witnessed growth of 5% in Q4 fy17. ENIL growth is 18% indicating improving market share
FOR FY 17 total income :549 cr(+12%),EBITDA :126cr (- 21%),PAT: 54cr (-49%). 70% is from radio and remaining from non radio business.
• Radio industry growth without new stations for FY17 is - 3%. With new station industry overall grew by 5% which is slowest growth in last several years( impact of demonetization q3/q4).

Currently ENIL is operating 49 stations in 39 cities. In 9 cities mirchi has 2 frequencies ( 3 frequencies in Hyderabad)
New stations:
• New stations contribution to q4 revenue is 16 cr with ebitda loss of 6 cr. For fy17 new stations revenue is 31 cr. 50% of which came in Q4 indicating that these stations started to show momentum. For the year EBITDA loss from new stations 29 cr, bulk of which(23 cr) came in first 9 months. Q4 ebitda loss is just 6cr. Likely to breakeven by FY18 end.
• New stations has done well (particularly bengaluru,hyderabad and Chandigarh) in terms listenership or pricing for ad reaching top 3 positions in those cities. Maintaining premium pricing at bengaluru and hyderabad which is leading to slower volumes build up. New station at bengaluru (mirchi 95) pricing is 10% higher than legacy station (mirchi 98.3) with capacity utilization of 41% in Q4. Hyderabad new station also priced at 5 to 10% higher but utilisation is 25%. Chandigarh is priced at same level of competitors with 33% utilization. Mirchi is usually the market leader in pricing. Not trying to undercut the market with low pricing. These new stations can grow 3 to 6 times depending on market. New station may reach EBITDA of 45 to 50% after few years.
• Marketing spending for new stations is mostly upfront and heavy in first year which gets tapered off by third year. Second frequency in existing cities not cannibalizing the revenue but conscious about the listenership cannibalization and working on that.
Update on stations acquired from TV TODAY:
• Four stations acquired from tv today doing well with doubling of revenue from the time of acquiring . Presently operating at 25% EBITDA. Mirchi has sale agreement for remaing 3 TV today radio stations which underwent revamp as ISHQ FM . These stations have been positioned as premium channel with premium pricing ad rate . May take time to increase the volume due to more competitive market in these cities. Acceptance of ISHQ fm has been very good.
Nonradio business :
• grew by 36% in Q4 which contributed largely to overall growth of 18%. Encouraging to do concert business with new stations which helps in building brand and revenue.
• Focus for next 3 to 4yrs is on improving the profitability from low double digit to 30% levels.
• Radio industry is losing listeners due to excess ad. Total no of radio listeners doesn’t seem to be increased inspite of new channels addition by industry . Whole industry seems to have realized this and trying to cut ad time.
• ENIL has cut the ad time by 4 min/hr in top 10 markets. During peak advertising like Diwali/christmas inventory will be limited to 18 min/hr instead of 22min and 14 min /hr in non -peak season. Should be able to offset volume growth with pricing. Essentially pricing has to increased by 22% to compensate for cut in inventory . Most of this will happen with upcoming season and end of FY18
• Car driving audience has become biggest target for radio industry and advertisers. Almost 75% of the car were tuned to FM radio. With increase in no of cars this segment is likely to increase further.
• Impact of new phase 3 players: As most of the frequencies acquired at high rate unlikely to see underpricing and taking away market share.
• GST may hold advertisers impacting q1 and q2 nos. GST is positive for non FCT business.
Pricing and utilization:
• Legacy 32 stations:
Price was up by 12% in Q4 & for full year price is up by 7.6%.
Price :10,727 FOR FY17. FOR Q4: 12,029.
• Utilization (based on 13 min): 98% in FY17. top 8 stations:118% ,remaining 24 stations:91%.
• For new stations: Price 4,250 for fy17( not clear about this). capacity utilizations is around 15%.

Impact of digital radio: provides big opportunity for existing players. With understanding of consumer needs,music and technology will be able to transfer from traditional FM to onlineFM. Already have strong presence in facebook/youtube/twitter and instagram. Presently have 19 online radio stations, will be reaching 50 online stations soon. Doing lot of creative audio –video work in digital space for clients. Already 300 people are working on this. Company does not need to employ extra for this. Going to position itself as full –on entertainment company rather just music player.

New auction /M&A oppurtunities:
• Picked up 21 new stations in second batch with total bid amount of 51 Cr. These are relatively small stations but economically viable.Plan to do networking in these stations so that content/people/establishment and marketing cost will be very low.( DOES IT MEAN THEY OPERATE VARIOUS STATIONS FROM SINGLE LOCATION?)
• During last auction only 25% of licences were taken up. Future batches with smaller cities failure rate is going to be high for Govt.
• By april next year M&A oppurtunities will available but company will focus on consolidating existing channels for next 2 to 3 years.

(narendra) #81

ENIL announced Q1Fy18 results today.
Total income reduced by 5%( 104 cr vs 110 cr)
Total expenses up by 14% (104 cr vs 91 cr)
Net profit down by 72% (4.5 cr v/s 16.6 cr.)
The increase in expenses as indicated by management during past concalls related to marketing expenses/employee cost…etc.
Reduction is top line is unexplainable, that too when other competitors like music broad cost, HT media have increased top line by almost 10% during the same quarter.
Interesting to listen management view during tomorrow concall.